NO. 83-453 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1984 

RAY GROSSMAN, 

Plaintiff and Appellant, 

STATE OF MONTANA, DEPARTMENT OF 

NATURAL RESOURCES, et al., 

Defendants and Respondents. 

ORIGINAL PROCEEDING: 

Counsel of Record: 

For Appellant: 

Hooks and Budewitz, Townsend, Montana 

Patrick F. Hooks argued, Townsend, Fontana 

For Respondents: 

Hon. Governor Ted Schwinden, Helena, Montana 

Hon. Mike Greely, Attorney General, Helena, Montana 

Hon. Jim Waltermire, Secretary of State, Helena, 

Montana 

Leo Berry, Department of Natural Resources, Helena, 

Montana 

Robert Lane arqued, DNR., Helena, Montana 

Oitzinqer and Mullendore, Helena, Montana 

John J. Oitzinqer arqued, Helena, Montana 

Mike Younq, Dept. of Admin., Helena. Montana 

G. Steven Brown, BNR. , Helena, Montana 

Filed: Mh'i 

Submitted: March 1, 1984 

Decided: May 7, 1984 
Mr. Justice John C. Sheehy delivered the Opinion of the 

Court. 

At issue here is the state constitutionality of several 

acts of the legislature allowing the issuance of state 

revenue bonds. These bonds would be financed by coal 

severance taxes to provide proceeds for the development of 

state water resources. This action requires a decision by 

the Court not only on the state constitutionality of the 

enactment by the legislature of the enabling provisions, but 

also the state constitutionality of the application of the 

bond proceeds to the projects proposed by the legislature to 

receive such proceeds. 

We hold the enactments of the statutes hereinafter 

enumerated and discussed relating to the revenue bonds in 

question are in accord with our state constitution; and that 

the proposed uses of the bond proceeds are likewise consonant 

with the state constitution. 

I. 

Ray Grossman is a self-employed citizen of the United 

States of America and a citizen, resident and registered 

elector of Montana, residing in Townsend, Broadwater County. 

He owns real and personal property on which he pays the State 

and its subdivisions real and personal property taxes. He 

also pays the State income tax on his earnings. 

Grossman contends that Ch. 505, Laws of Montana (1981) ; 

H.B. 846 (47th Leg. Assembly); and H.B. 885 (48th Leg. 

Assembly), enacted as Ch. 705, Laws of Montana (19831, are 

void and unconstitutional. In support of his claims, he 

filed a complaint for declaratory judgment in this Court 

requesting us to take original jurisdiction. The respondents 
have answered the complaint urging us to accept jurisdiction, 

and supporting in all particulars the state constitutionality 

of the disputed acts. The respondents further request that 

we grant summary judgment in favor of the State. This Court 

reserved the question of assumption of jurisdiction, and 

granted oral argument on all phases of the issues. The 

parties have stipulated, and it appears from the record, that 

there are no fact issues before us, only questions of law. 

Original jurisdiction depends on the resolution of two 

questions: (1.) Whether the Supreme Court has original 

jurisdi-ction of such a declaratory judgment action; and (2) 

if it has jurisdiction, whether Grossman has standing to 

bring the action. 

The original jurisdiction of this Court is defined in 

Art. VII, § 2, 1972 Mont. Const., where it is provided that 

we may "issu.e, hear, a.nd determine writs of habeas corpus and 

such other writs as may be provided by law." 

The state constitutional grant of original jurisdiction 

in this Court is open to interpretation. The gra.nt was 

interpreted favorably to acceptance by the Court in 

Forty-Second. Legislative Assembly 17. Lennon (1971), 156 Mont. 

416, 420-22, 481 P.2d 330, where, interpreting the 1889 Mont. 

Const., Art. VIII, S 3, Justice Haswell (now Chief Justice) 

wrote for the Court: 

"A declaratory judgment action is a proper 

proceeding in which to reach and answer the legal 

issues raised in this proceeding. A court of 

record in Montana is specifically granted the power 

'to declare rights, status, and other legal 

relations' of a party (section 93-8901, R.C.M. 

1947) [now section 27-8-201, MCA] which 'are 

affected by a statute' (section 93-8902, R.C.M. 

1947) [now section 27-8-202, MCA] and in which a 

declaratory judgment 'will terminate the 

controversy or remove an uncertainty.' (section 
93-8905, R.C.M. 1947) [now section 27-8-205, MCA. ] 

This is precisely the situation that exists in the 

present case. Here we have a presently existing 

bona fide , justiciable, legal controversy 

concerning the authority of the legislative 

assembly under the constitution and statutes of 

Montana in enacting mandatory enabling legislation 

for a constitutional convention. Resolution of the 

issues presented herein is necessary to eliminate 

or reduce a multiplicity of future litigation; to 

prevent interminable delay in the election of 

delegates, the formation, and the functioning of 

the constitutional convention; and to eliminate 

needless expenditure of public funds on procedures 

that otherwise might subsequently be declared 

illegal. One of the basic purposes of the Montana 

Declaratory Judgments Act is to provide a procedure 

for advance determination of such issues, thereby 

eliminating these otherwise detrimental results. 

"Under the circumstances of the present case, an 

original proceeding for declaratory judgment in the 

Supreme Court is likewise authorized. Jurisdiction 

is granted this Court to hear and determine 'such 

other original and remedial writs as may be 

necessary or proper to the complete exercise of its 

appellate jurisdiction. (Art. VII, 5 3, [I8891 

Montana Constitution.) A similar provision exists 

by statute (section 93-214, R.C.M. 1947) [now 

section 3-2-203, MCA], and Montana case law is 

replete with authority sustaining the original 

jurisdiction of the Supreme Court in declaratory 

judgment actions in a variety of situations (citing 

authority) . The foregoing cases establish the 

original jurisdiction of the Supreme Court in a 

declaratory judgment action where legal questions 

of an emergency nature are presented and ordinary 

legal procedures will not afford timely or adequate 

relief. Such is the situation here. We have an 

urgent emergency situation in view of the mandatory 

legislation required of the present session of the 

legislative assembly, the absence of any factual 

controversy but only pure legal questions that must 

ultimately be answered by this Court in any event, 

and ordinary legal procedures that will not afford 

timely relief." 

The wording of the judicial article defining our 

original jurisdiction contained in the 1972 Montana 

Constitution is different from the provisions of the judicial 

article of the 1889 Montana Constitution. Does that 

difference mean that the original jurisdiction power of this 

Court is less than we perceived it to be in Lennon? 
During the Constitutional Convention, on March 9, 1972, 

the Committee on Style, Drafting, Transition and Submission 

reported on the judicial article for submission to the 

convention. (Tr. at 911, 913, 1972 Montana Constitutional 

Convention Proceedings. ) Art. VII (2) (1) , came bef ore the 

convention floor on March 13, 1972, in the following form: 

"SUPREME COURT JURISDICTION. (1) The supreme 

court has appellate jurisdiction and may issue, 

hear, and determine writs appropriate thereto. It 

has original jurisdiction to issue, hear, and 

determine writs of habeas corpus." 

Motion was made to add to the subsection we have quoted 

above, the language "and such other writs as may be provided 

by law." In a floor discussion Delegate Berg told the 

convention : 

"DELEGATE BERG: Mr. Chairman. I join, of course, 

in this motion to reconsider. It developed that 

after we had written the article, Sandra 

Muckelston, the research analyst, pointed out to us 

a case in the Montana Supreme Court, known as 

Naegele 5 Kelsey, in which the Supreme Court held 

that under the old Constitution there was some 

question, perhaps, as to whether writs--remedial 

writs--might be issued if it was limited to 

appellate jurisdiction as we had written it here. 

It is to correct that possibility that we ask that 

this amendment be made --- so as to conform with 

- the Supreme Court has - already determined 

iurisdiction to be." (Em~hasis added.) Tr 

what 

- its 

- - . at 

2178, 1972 Montana constituiional convention. 

When on March 13, 1972, the Montana Constitutional 

Convention was acting on Art. VII, 2 (I), the Lennon 

decision was already in the books, it having been decided on 

February 19, 1971. It appears evident from the discussion of 

Delegate Berg that it was the intention of the delegates to 

the 1972 constitutional convention that our origina.1 

jurisdiction, as interpreted by the Supreme Court, be 

continued. The amendment was adopted by the 1972 Montana 

Constitutional Convention, so that the present form of Art. 

VII, 5 2(1) , is: 
"Section 2. Supreme court jurisdiction. (1) The 

supreme court has appellate jurisdiction and may 

issue, hear, and determine writs appropriate 

thereto. It has original jurisdiction to issue, 

hear, and determine writs of habeas corpus and such 

other writs as may be provided hy law." 

The decision referred to by Delegate Berg in the 

const.itutiona1 convention is State ex rel. Nagle v. Kelsey 

(1936), 102 Mont. 8, 55 P.2d 685. In that case the Court 

discussed whether it had jurisdiction to accept an original 

proceeding for a writ of quo warranto. The contention was 

made that an original proceeding was not appropriate to the 

appellate jurisdiction, and therefore this Court had no 

jurisdiction. In refuting the contention, this Court pointed 

out in Kelsey that in the 1881 case of In re MacKnight 

(1891), 11 Mont. 126, 27 P. 336, then Justice Harwood, 

writing for the Court, said that for more than 40 years, even 

before we entered statehood, the jurisdiction of this Court 

was not limited solely to such writs a.s may relate to the 

exercise of its appellate jurisdiction. 

An action for declaratory judgment is "provided by law" 

as was noted in Lennon. It might be contended that a 

declaratory judgment action is not one for the issuance of a 

"writ." That contention would fa.vor form over substance. 

The relief in this case, if Grossman were to be successful in 

his contentions, would have the force and effect of a writ of 

prohibition against the state officers. We therefore 

determine that the rule in Lennon, which was applicable to 

the 1889 Constitution, is equally applicable to the original 

jurisdiction of this Court under the 1972 Montana 

Constitution. 

The factors described in Lennon are present here. In 

the record of this case, we fin.d that the underwriters and 
bond purchasers sought to obtain an unqualified legal opinion 

from recognized bond counsel as to the legal validity of 

bonds and the underlying security arrangements. Montana 

lawyers had refused to issue an unqualified opinion, raising 

several possible issues to be first determined, including 

most of the issues raised in this case. The underwriters 

have been advised by their counsel in writing that it would 

be imprudent for the underwriters and the State to proceed 

with the proposed water development program financing without 

a conclusive resolution by this Court of all the relevant 

1-egal issues relating to the bonds. Without a final decision 

by this Court, the bonds are in effect unmarketable, or may 

be sold only with an excessive premium. Even the time it 

would take to begin this action in District Court and then 

appeal to this Court is a major deterrent. If we should find 

here constitutions 1 objections which would negate the 

issuance of the bonds, decision by us now will be in 

sufficient time to alert the legislature to such amendatory 

provisions as may be necessary when it convenes in 1985. 

We therefore hold that this Court does have original 

jurisdiction to accept declaratory judgment proceedings where 

the issues have impact of major importance on a statewide 

basis, or upon a major segment of the state, and where the 

purpose of the declaratory judgment proceedings will serve 

the office of a writ provided by law, in accordance with Art. 

VII, S 2(1), 1972 Mont. Const. 

The second problem to be resolved if we are to accept 

jurisdiction of this case is whether Grossman has standing to 

sue. His complaint alleges that he is a citizen, resident, 

elector, and taxpayer. In that stance, he is no different 

than any other citizen, resident, el-ector, or taxpayer in 
this state. He alleges no direct adverse impact on him by 

virtue of the legislative enactments that would not be felt 

by any other citizen, resident, elector, or taxpayer of the 

state. In Chovanak v. Matthews (1948) , 120 Mont. 520, 

526-27, 188 P.2d 582, 585, we held: 

"And the Supreme Court holds that to invoke 

judicial power to disregard a statute as 

unconstitutional, the party who assails it must 

show, not only that the statute is invalid, but 

that he has sustained, or is in immediate danger of 

sustaining some direct injury as a result of its 

enforcement, and not merely that he suffers in some 

indefinite way in common with people generally. 

(Citing cases. ) 

"The interest shown by appellant is only his 

interest as a citizen, elector, taxpayer and 

resident of Lewis and Clark County. This is the 

same interest that the other citizens, electors, 

taxpayers, and residents of the county have in the 

matter, and it is not such interest as is permitted 

to invoke the exercise of the judicial power of 

determining whether an Act of the legislature is 

violative of the Constitution." 

The pronouncement in Chavanak was repeated in effect in 

Stewart v. Board of County Commissioners (1977), 175 Mont. 

197, 201, 573 P.2d 184, 186, where we said: 

"From these cases we synthesize that the issue 

presented for review must represent a 'case' or 

'controversy' within the judicial cognizance of the 

state sovereignty. Additionally, the following 

minimum criteria are necessary to establish 

standing to sue a governmental entity: (1) The 

complaining party must clearly allege past, present 

or threatened injury to a property or civil right; 

and (2) the alleged injury must be distinguishable 

from the injury to the public generally, but the 

injury need not be exclusive to the complaining 

party. " 

Respondents have not objected to Grossma.nls complaint on 

the ground that he has no standing. We noted, however, in 

Stewart, that objections to standing cannot be waived and may 

be raised by the court sua sponte. 175 Mont. at 204, 573 

P.2d at 188. In view of the importance of the issues here, 
we must specifically determine whether assuming jurisdiction 

of Grossman's compl-aint is consonant with our laws and the 

decided cases. 

There is no question that this Court will recognize 

standing in a taxpayer who is directly adversely affected by 

a proposed assessment and levy of taxes upon him. State ex 

rel. Conrad v. Managhan (1971), 157 Mont. 335, 338, 485 P.2d 

948, 950. 

Conrad was a class action where timberland owners were 

directly affected by the refusal of 5 northwestern counties 

to accept the amount of land valuation increases for tax 

purposes mandated by the then State Board of Equalization. 

There we held that a landowner had standing to bring a class 

declaratory judgment action, and need not go to the extreme 

of paying property taxes under protest and filing suit for 

recovery. See also, State ex rel. Fulton v. District Court 

(1961), 139 Mont. 573, 366 P.2d 435; Northwest Improvement 

Companv v. Rosebud County (19551, 129 Mont. 41-2, 288 P.2d 

657; Brophy Coal Company v. Matthews (1951), 125 Mont. 212, 

233 P.2d 397. 

The rule that a taxpayer must be directly adversely 

affected to bring an action contesting the val-idity of state 

bonds or the use of tax monies is not as unbendable as our 

pronouncements in Chovanak and Stewart, make it seem. For 

example in Huber v. Groff (1976), 171 Mont. 442, 558 P.2d 

1124, we accepted original jurisdiction where the plaintiff, 

a taxpayer, sought to have the Housing Act of 1975 declared 

unconstitutional on several grounds. Huberls standing was 

not discussed. In State ex rel. Ward. v. Anderson (1971), ,-58 

Mont. 279, 491 P.2d 868, this Court accepted original 

jurisdiction of an injunction proceeding to determine the 
validity of bonds to be funded by tobacco taxes, income and 

corporation license tax collections, and separate bonds to be 

funded by a gasoline license tax. In Lodge v. Ayers (1939), 

108 Mont. 527, 91 P.2d 691, this Court accepted the original 

application of a taxpayer who contested the validity of 

refunding a bonded indebtedness on which the state had 

defaulted or was threatening to default by issuance of new 

bonds. In Martin v. State Highway Commission (1939), 107 

Mont. 603, 88 P.2d 41, an original application for injunction 

to sustain the issuance of debentures funded by a tax on 

motor fuels was accepted without discussion as to the status 

of the plaintiff. There are other examples. 

From these cases it will be seen that we must add a 

further exception to the strictures on standing announced in 

Chovanak and Stewart above. We will recognize the standing 

of a ta.xpayer, without more, to question the state 

constitutional validity of a ta.x or use of tax monies where 

the issue or issues presented directly affect the 

constitutional. validity of the state or its political 

subdivisions acting to col.lect the tax, issue bonds, or use 

the proceeds thereof. This is not to say we encourage 

original. filings in this Court by taxpayers. The district 

courts in most cases are open as the starting forum for many 

of such controversies. It is when special circumstances, 

presenting issues of an urgent or emergency nature, exist 

requiring speedy determination, that we deem it wise to 

accept original jurisdiction, and to recognize standing of an 

ordinary taxpayer for that proceeding. 

The urgent and emergency factors which excite our 

acceptance of original jurisdiction here and drape the 

taxpayer Grossman with standing are these: Grossman 
challenges the constitutionality of various aspects of the 

State's coal severance tax bond program; the State cannot 

issue any of the proposed coal severance tax bonds authorized 

by the legislature until the issues raised by the plaintiff 

have been resolved by this Court; a District Court opinion is . -

not sufficiently authoritative to provide underwriters and 

investors with a final resolution of the constitutional 

issues involved; unless we accept jurisdiction the issuance 

of bonds will be delayed by several months if District Court 

proceedings are required and the bonds are found valid; if we 

do not accept jurisdiction and the bonds are not found to be 

valid, the process of litigation may well go past the period 

when the 1985 legislative assembly will convene, meet and 

adjourn; and the health and welfare of a large segment of the 

State's population may well be bettered if the bonds are 

found valid and the proceeds used for the envisioned 

projects. 

From the economic viewpoint of the State as a whole, 

from the viewpoint of the use of tax monies to develop water 

resources, from the viewpoint of a legislative break from the 

past in the constitutional use of State monies for the 

improvement of the human condition of our residents, no more 

important case has come before this Court. We hold ourselves 

as a court to have authority over the subject matter and over 

the parties. 

We should without hesitancy recognize this case for what 

it appears to be: a test case designed to obtain a final 

judgment on the validity of coal severance tax revenue bonds 

so that if valid, the bonds will be marketable. We will no 

longer be qualmish about jurisdiction in a bond issuance 

case. When the issues are fairly stated, fully explored and 
vigorously contended, as they appear here, we have a 

justiciable controversy suitable for final resolution by this 

Court. Legal niceties must bend on occasion to the reality 

of the market. The living law moves with the times. 

We assume jurisdiction. 

Montana taxes the production of coal within its borders 

by imposing a tax on severance of coal ranging from 20% to 

30% of value for strip mining, and 3% to 4% of value for 

underground mining, the range depending in each type of 

mining on the B.T.U. per pound of coal produced. Section 

1.5-35-103, MCA. 

Tax money produced by the severance of coal is allocated 

to several purposes, section 15-35-108, MCA, but under our 

state constitution 50% of the severance tax is dedicated to a 

permanent trust fund, the interest and income from which may 

be appropriated. The principal of the trust is inviolate 

unless appropriated by a vote of three-fourths of the members 

of each house of the legislature. 1972 Mont. Const., Art. 

IX, 5 5. 

Section 17-6-203(5), MCA, requires the separate 

investment of the permanent coal severance tax trust fund; 

but it also provides that the principal of the trust may gain 

or lose if any part of the principal is appropriated by the 

required three-fourths vote in each house. 

In 1981, the legislature enacted Ch. 505, Laws of 

Montana (1981) which a.ffects the principal of the permanent 

coal severance tax trust. The act created three funds 

within the trust, including a coal severance tax bond fund, a 

coal severance tax permanent fund, and a coal severance tax 

income fund. On December 31 and June 30 of each year the 
State Treasurer must transfer into the coal severance tax 

permanent fund all monies in the bond fund except amounts 

necessary to meet principal and interest payments payable 

from the bond fund on the next semiannual payment dates. 

Section 17-5-703, MCA. More than three-quarters of the 

members of each house supported the enactment. 

The money flowing into the coal severance tax bond fund 

comprises the constitutionally dedicated (50%) receipts from 

the tax. Section 17-5-703, MCA. That fund is pledged to the 

payment of principal and interest on all state-issued coalseverance tax bonds. Section 17-5-705, MCA. The board of 

eraminers was given authority upon approval of the 

legislature to issue and sell coal severance tax bonds to 

finance water development projects approved by the 

legislature. Section 17-5-706, MCA. 

The legislature is required by section 17-5-709, MCA, to 

provide for "the continued assessment, levy, collection, and 

deposit" into the bond fund of the coal severance tax 

(apparently meaning the 50% constitutionally dedicated funds) 

which, with funds from other sources, will be sufficient to 

service the debt payments required by issued bonds. 

The statutes go on to provide for the use of a fiscal 

agent by the State, to authorize trust indentures and a 

trustee, any trust company or bank with trust powers, to add 

provisions for the protection of bondholders, and to provide 

refunding. Sections 17-5-710 (4) , 17-5-711, 17-5-712, and 

17-5-716, MCA. The State is further pledged not to impair 

bond obligations. Section 17-5-717, MCA. Nor may the total 

of bonds issued for water resource development exceed $250 

million. Section 17-5-719, MCA. 
We may explain the statutory scheme following the 1981 

enactment thusly: The State will now deposit 50% of the coal 

severance tax revenues in a bond account pledged to the 

payment of State-issued bonds; monies which are not necessary 

to meet upcoming bond payments will be transferred on 

December 31 and June 30 of each year into the coal severance 

tax permanent fund. When water projects are approved by the 

legislature, and the issuance of coal severance tax bonds for 

such projects is also approved by the legislature, the State 

will issue and sell such bonds to obtain the proceeds 

necessary for the water projects. The bonded indebtedness, 

with interest thereon, will he paid for out of pledged coal 

severance tax revenues, or such obligations may be refunded 

in the future. When bonds are issued, each succeeding 

biennial legislative assembly must appropriate to the coal 

severance tax bond fund the monies necessary for the State to 

meet its obligations under the bonds for the ensuing biennium 

period. The obligation to appropriate such funds would not 

change if the legislature were hereafter required to meet 

annually. 

Also included in Ch. 505, Laws of Montana (1 981) , was a 

water development program, now codified in sections 85-1-601 

to 623, inclusive, MCA. Its aim is to provide long-term 

water development with financial and administrative 

assistance. Here is created a water development state 

special revenue fund (formerly an "earmarked fund") to 

accumulate from various sources funds for the operation and 

maintenance of State owned projects and works. Section 

85-1-604, MCA. 

Also created was a water development debt service fund 

derived from 1%% of all coal severance taxes collected but 
not otherwise allocated. Such fund may be used for grants 

and loans to State and. local governments for water purposes. 

Sections 85-1-603, and 85-1-605, MCA. 

Grants and loans to private persons may be appropriated 

out of the water development state special revenue account 

established in section 85-1-604, MCA, under the authority of 

section 85-1-606, MCA, up to 5 percent of said state special 

account or 25 percent of the project cost, whichever is less. 

Section 85-1-614, MCA. 

The State is given a lien as security for any loan made 

from the state special revenue account or water development 

account. Section 85-1-615, MCA. 

There are also provisions now in the code for the 

issuance and sale by the State of water development bonds 

upon authorization of a project by the legisla-ture, funded by 

the water development debt service account, the source of 

which is 1%% of the coal severance taxes. Sections 85-1-617, 

and 85-1-619, MCA. The proceeds of the bonds may be used 

only for loans in the water development. program. Section 

85-1-618, MCA. 

The coal severance tax monies which pour into the water 

development debt service fund are kept separate from the 

monies from other sources which pour into the water 

development state special revenue fund., except that any 

surplus of funds in the debt service fund above debt service 

requirements then find their way into the state special 

revenue fund, where these and other monies may be spent for 

the purposes described in section 85-1-604, MCA. 

With respect to bonds issued under the water development 

program the legislature is again obligated to provide 

sufficient funds from time to time as necessary to meet 
promptly the full payment of principal and interest and 

redemption premiums when due on all bonds payable from the 

fund. Section 85-1-619, MCA. 

The water development bond program outlined in Ch. 505, 

Laws of Montana (1981), cumulated in the authorization by the 

legislature for the issuance and sale of $5 million of water 

development bonds for loans in the water development program. 

Section 85-1-623, MCA. 

Again the statutory scheme made be explained thusly: 

I$% of the coal severance tax revenues will go into a debt 

service fund for the purpose of funding and refunding the 

issuance and sale of bonds for water development. The 

proceeds of the sale of such bonds may be used only for loans 

for water development projects. The legislature also 

provided the accumulation of a state special revenue account 

fund from other sources described in section 85-1-604, MCA, 

but including the excess of the coal severance tax proceeds 

not required for debt service. The funds in the state 

special revenue account may be used for various projects 

including grants and loans to State and local governments, 

and grants and loans to private persons. 

A further step taken by the legislature in 1981 was the 

passage and approval. of House Bill 846. The lesislature 

found that the Tonyue River Dam is in a dangerously unsafe 

condition and needs repair and rehabilitation to prevent 

washout, flood, damage to property and possible loss of life. 

The legislature authorized, among other things, the issuance 

of bonds not exceeding $10 million in total face value to be 

funded and repaid from the coal severance tax permanent fund, 

hereinbefore described, and found in section 17-5-703, MCA. 
In 1983, the legislature took further steps to provide 

funds for various State water projects. In Ch. 705, Laws of 

Montana (1983) , it authorize@ the issuance of $45.35 million 

for the development of hydropower potential at Painted Rocks 

Dam, Broadwater Dam, and Cooney Dam; bonds not to exceed the 

total sum of $551,900 for the repair and rehabilitation of 

Yellow Water Dam in Petroleum County, Cottonwood Dam in Park 

County, and Martinsdale Dam in Meagher and Wheatland 

Counties; and $17,044,735 for loans to local government 

entities, including cities, towns, counties, soil 

conservation districts and irrigation districts, for 22 

different water projects. 

Thus, at the present time, the State has authorized the 

issuance of state water resource development bonds, to be 

financed and repaid out of coal severance tax revenues as 

herein described up to the following amounts under the 

following authorizations: 

$ 5,000,000 Section 85-1-623, MCA 

10,000,000 H.B. 846, Laws of Montana (1981) 

45,350,000 Ch. 705, 5 3, Laws of Montana (1983) 

551,900 Ch. 705, 5 4, Laws of Montana (1983) 

17,044,735 Ch. 705, S 5, Laws of Montana (1983) 

The 1981 legislature also included in its 

appropriations, in H.B. 709, Laws of Montana (1981), a. 

$350,000 appropriation to the Department of Na.tura1 Resources 

and Conservation for the "small water projects construction 

loan program" administered by the Department to be paid for 

u.nder the water development program we have hereinbefore 

described. 

IV. 

In SS 5 and 6, Ch. 705, Laws of Montana (19831, (H.B. 

885) the legislature authorized the issuance of coal 
severance tax revenue bonds in an amount not to exceed 

$17,044,735 for the purpose of making loans from the bond 

proceeds to 21 political subdivisions and local government 

entities for 22 water development projects. Grossman 

contends that this authorization violates 1972 Mont. Const., 

Art. V, § 12: "The legislature shall not pass a special or 

local act when a general act is, or can be made, applicable." 

Grossman contends that the appropriation of funds for 

favorable loans to a score of small municipalities, water 

districts and portions of a. county constitutes special 

legislation, and is constitutionally invalid. 

In presenting their arguments on this issue, all parties 

rely on earlier cases of this Court, some decided under the 

1972 Montana Constitution, and others under the 1889 Montana 

Constitution. For the purposes of this opinion, we determine 

that the respective provisions in the two constitutions are 

essentially the same. 

We would be skirting the issue if we did not readily 

admit that the effect of §S 5 and 6, Ch. 705, Laws of Montana 

(1983) , is special or local. The 22 projects authorized for 

loans under the bond program by the legislation relate to 

particular municipalities or particular governmental 

subdivisions on the basis of individual cases for less than a 

class and apply to particular members of a class 

particularized by the express terms of the act. Thus the 

sections seem to come within the definition of "special law" 

found in Sta.te ex rel. Powell v. State Bank of Moore (1931), 

90 Mont. 539, 4 P.2d 717; State ex rel. Redman v. Meyers 

(1922), 65 Mont. 124, 210 P. 1064. Yet we do not find SS 5 

and 6, Ch. 705, Laws of Montana (1983), to be special or 

local acts which are prohibited by Art. V, S 12. 
It is important to realize that the language of 1972 

Mont. Const., Art. V, S 12, is not absolutely prohibitory. 

The legislature is enjoined from passing a special or local 

act only when a general act is or can be ma.de applicable. We 

cannot imagine how the legislature could draft a general act 

of state-wide application providing for the issuance and sale 

of revenue bonds and at the same time keep a handle on the 

way the bond proceeds are to be spent or loaned except 

through its direct authorization of projects. This Court 

faced a similar problem in State ex rel. Ford v. Schofield 

(1917), 53 Mont. 502, 165 P. 594. There the legislature by a 

single act created Carter County. The act creating the 

county was attacked on the ground that it was special 

legislation, since there was in effect at the time a general 

statute providing for the organization and creation of new 

counties. In upholding the power of the legislature to 

create a single county where conditions had changed so as to 

make the operation of the general a.ct inapplj-cable, this 

Court also looked at the question under the constitutional 

provision, who should decide whether a general law could be 

made applicable, the courts, or the legislature? It decided: 

"We believe there are many subjects of legislation, 

which, from their inherent character, are subject 

to regulation by general laws, and that the courts 

are as advantageously situated as any other 

department of government to say so; on the other 

hand, there are certain subjects which may or may 

not lend themselves to regulation by general laws, 

depending upon extrinsic facts and circumstances 

which the Legislature is peculiarly fitted to 

ascertain and determine, but which the courts have 

no means available to ascertain. Upon the first 

class of subjects, the courts can and must 

determine the applicability of general laws; upon 

the second, the Legislature must be left free to 

act." 53 Mont. at 510-11, 165 P. at 596. 

The legislature stated its purpose and policy in 

enacting Ch. 705, Laws of Montana (1983). It stated the 
policy of Monta.na is to promote conservation, development and 

beneficial use of the state's water resources to secure 

maximum economic and social prosperity for its citizens. In 

section 1(6), it made specific findings that the water 

development projects to which objection is here made as local 

or special would "implement the state's policy of full use, 

conservation, and protection of its water resources." In 

that light, the legislature here, by specifying projects 

which it has authorized upon specific findings, is merely 

implementing a general rule within the purview of the 

constitution. 

In Hotel Dorset Company v. Trust for Cultural Resources 

of City of New York (1978), 46 N.Y.2d 358, 385 N.E.2d 1284, a 

legislative act which provided support for financially 

troubled museums in the state of New York was attacked upon 

the ground that it benefited only the Museum of Modern Art in 

the City of New York. The New York Court of Appeals held: 

". . . If the subject matter of the legislation is 

of sufficient importance to the State generally, 

the legislation cannot be deemed a local law even 

though it deals directly with the affairs of the 

municipality. This has been an accepted principle 

for many years, and there is ample showing from the 

legislative findings alone that the maintenance of 

cultural institutions is a State concern . . ." 

385 N.E.2d at 1291. 

The New York court also said: 

"Courts are required to exercise a la.rge measure of 

restraint when considering highly intricate and 

imaginative schemes for public financing or for 

public expenditures designed to be in the public 

interest. Some may be highly controversial. But 

when a court reviews such a decision, it must 

operate on the rule that it may not substitute its 

judgment for tha.t of the body which made the 

decision. Judges, however much they might disagree 

with the wisdom of the act under review, axe not 

free to invalidate it on that ground.. . . 

". . . We should not strain ourselves to find 

illegality in such programs. The problems of a 

modern city can never be solved unless arrangements 
like these . . . are upheld, unless they are 

patently illegal . . ." 385 N.E.2d at 1289. 

We regard the passage of Ch. 705, Laws of Montana 

(1983) , as an implementation of the water development policy 

enunciated by the legislature and contained in sections 

85-1-601 through 85-1-623, MCA. Section 85-1-605, MCA, 

provides that loans and grants may be made to a "department, 

agency, board, commission, or other division of state 

government or to a city, county, or other political 

subdivision or local government body of the state." No class 

of government entity is excluded. Therefore the water 

development financing program created by those statutes is 

"generalw legislation within the meaning of 1972 Mont. 

Const., Art. V, 5 12. 

From either of two approaches therefore, we find that 

the provisions of SS 5 a.nd 6, Ch. 705, Laws of Montana (1983) 

are valid under Art. V, 5 12 of the 1972 Montana 

Constitution. As an implementation of the water development 

financing program, it is within the "general" legislation; as 

a separately passed act authorizing loan from bond proceeds 

for local projects, even though they may be local in effect, 

these are provisions for which a general act can not be 

provided. 

Grossman does not directly attack the remaining 

pr0~7isions of Ch. 705, Laws of Montana (1983) , as having 

local effect, although the remaining provisions relate to 

hydroelectric development at three loca.tions, and to three 

separate dams at other locations. To foreclose further 

argument, let it be said that our result under the 1972 Mont. 

Const., Art. V, § 12, would. be the same. 
Next Grossman attacks the validity of the 1egisla.tive 

scheme that pledges each succeeding legislature to fund the 

debt payments of principal, interest, redemption costs and 

related expenses for the coal severance tax bonds. He 

characterizes this as a "continuing appropriation" which 

offends the intent, spirit and lancguage of the 1972 Mont. 

Const., Art. IX, 5 5. 

Specifically, Grossman charges that section 17-5-705, 

MCA, which pledges the coal severance tax bond fund to the 

payment of coal severance tax bonds; section 17-5-709, MCA, 

which requires a continued deposit of coal severance tax 

collections into the bond fund; section 17-5-719, MCA, which 

limits such bonds to $250,000,000; and Ch. 705, Laws of 

Montana (1983) , (H.B. 885) violate the constitutional 

provisions of Art. VIII, 5s 8, 9, and 14, and Art. IX, S 5. 

We set out the state constitutional provisions involved: 

"ARTICLE VIII. Section - 8. State debt. No state 

debt shall be created unless authorized by a 

two-thirds vote of the members of each house of the 

legislature or a majority of the electors voting 

thereon. No state debt shall be created to cover 

deficits incurred because appropriations exceeded 

anticipated revenue. 

"ARTICLE VIII. Section 9. Balanced budget. 

Appropriations by the legisllture shall not exceed 

anticipated revenue. 

"ARTICLE VIII. Section 14. Prohibited payments. 

Except for interest on tFe public debt, no money 

shall be paid out of the treasury unless upon an 

appropriation made by law and a warrant drawn by 

the proper officer in pursuance thereof. 

"ARTICLE IX. Section 5. Severance tax on 

coal--trust fund. The 1ecisla.ture shall dacate 

not less than one-fourth % of the coal severance 

tax to a trust fund, the -interest and income from 

which may be appropriated. The principal of the 

trust shall forever remain inviolate unless 

appropriated by vote of three-fourths (3/4) of the 

members of each house of the legislature. After 

December 31, 1979, at least fifty percent (50%) of 
the severance tax shall be dedicated to the trust 

fund. " 

In essence, Grossman is saying t.hat the 48th Legislative 

Assembly which met in 1983 may not constitutionally bind the 

49th Legislative Assembly and each succeeding legislative 

assembly to "appropriate" the coal ta.x monies necessary to 

service the State coal tax bonds; that the 48th Legislative 

Assembly invaded the principal of the coal. severance tax 

trust fund for yea-rs to come; and that each bond issue 

requires a separate appropriation of the coal severance tax 

revenues by a three-quarters vote of the members of each 

house of the legislature. 

Grossman builds his case around the state constitutional 

provisions above, which limit each legislature to the 

anticipated revenues in the budget period for legislative 

appropriations, and the constitutional necessity of an 

appropriation before a state warrant for money can be issued 

against the appropriation. 

Under the bond program it will certainly be the duty of 

each succeeding legislature appropriate for the budget 

period for which the legislative assembly is responsible, 

sufficient monies within anticipated revenues, includ.ing 

monies out of the coal severance tax fund, to service the 

bonded indebtedness. Under the 1889 Montana Constitution, we 

held the power of each 1egisla.tive assembly to bind the 

following assembles in the matter of long-term public debt to 

be clear: 

"The next contention is that the Act violates 

section 12 of Article XI1 of the [I8891 

Constitution, which provides that 'no appropriation 

of public money shall be made for a longer term 

than two years.' The word 'appropriation' as there 

used does not have application to a.n Act providing 

for the issuance of bonds or debentures, wherein 

the Act creating the debt also levies a tax 
sufficient to pay the debt (State ex rel. Bonner v. 

Dixon, supra). To hold otherwise would be to hold 

that a bond issue could never extend over a period 

of more than two years; because if a biennial 

appropriation to retire such a debt is necessary, 

the legislature would have the right to withhold 

the appropriation, and therefore the law creating 

the debt would, in effect, be repealable contrary 

to the command of section 2, Article XIII. The 

contention that the proceeds from the gasoline 

license tax sufficient to retire the debentures 

cannot be appropriated for more than two years is 

untenable." Martin v. State Highway Commission et 

al. (1939), 107 Mont. 603, 613, 88 P.2d 41, 46. 

Under the 1889 Constitution, our Court used an escape 

clause in that constitution to justify continued required 

appropriations service long- term public debt. This Court 

construed the word "appropriation" in the 1889 Constitution 

to apply only to the general fund, and not to special funds 

created by the legislature to retire the debt. State ex rel. 

Bonner v. Dixon (1921), 59 Mont. 58, 195 P. 841. We do not 

have the same language on which to rely in the 1972 

Constitution. The result nevertheless must be the same. 

In the construction constitutional provisions, we use 

the same rules which are applicable to the construction of 

statutes. Matter of McCabe (1975), 168 Mont. 334, 544 ~.2d 

825. In construing broad and general provisions of the 

constitution which tend in measure to conflict with specific 

ones, we are controlled by specific provisions, Jones and 

Herriott v. Judge (1.978), 176 Mont. 251, 577 P.2d 846, and an 

interpretation that achieves a reasonable result is favored, 

State v. Gafford (1977), 172 Mont. 380, 563 ~.2d 1129. 

Neither statutory nor constitutional construction should lead 

to absurd results, if reasonable construction will avoid it. 

Billings Properties, Inc. v. Yellowstone County (1964) , 144 

Mont. 25, 394 P.2d 182. In determining the meaning of the 

constitution, the Court must keep in mind that it is not the 
beginning of law for the state, but a constitution assumes 

the existence of a well understood system of law which is 

still to remain in force and to be administered, but under 

constitutional limitations. State ex rel. Hamshaw v. Justice 

Court of Union Township (1939), 108 Mont. 12, 88 P.2d 1. 

The 1972 Montana Constitution continues the financial 

powers and duties imposed on the State by the 1889 State 

Constitution. In short, each legislative assembly may make 

appropriations for the coming budget period, which must not 

exceed anticipated revenue. 1972 Mont. Const., Art. VIII, 5 

9. No state debt may be created to cover deficits incurred 

because appropriations may have exceeded anticipated revenue. 

However state debt can be created by a two-thirds vote of the 

members of each house, 1972 Mont. Const., Art. VIII, 5 8. 

Money borrowed on behalf of the state must be used only for 

the purposes specified in the authorizing law. 1972 Mont. 

Const., Art. VIII, 5 11. 

These constitutional provisions are easily harmonized. 

The state must live within its means as to its general 

expenditures, and must pay for new programs as it goes, 

without incurring debt. But if a project or new program will 

require the incurrence of debt, two-thirds of the members of 

each house can authorize it. Since the constitution provides 

for the use of borrowed funds, it undoubtedly follows that 

the state could in fact borrow money or create indebtedness. 

Incurrence of long-term debt through the issuance of bonds or 

similar instruments is a time-honored method of governmental 

financing at all levels. We hold it eminently clear that the 

legislature can authorize borrowing long-term by issuing and 

selling bonds, and can provide for the servicing for such 

indebtedness by repayment or refunding. 
There is nothing inherently special about the coal 

severance trust fund provided in Art. IX, S 5, or the terms 

of that section, to insulate and make immune coal tax 

revenues from use as a funding source for long-term state 

bonds. Once three-quarters of the members of each house 

approve, the state can validly issue bonds or other debt 

instruments against coal tax revenues in the manner provided. 

In the water resource development program adopted by two 

sucessive legislatures, the 47th and 48th Legislative 

Assemblies by proper vote, the legislature has the power to 

invade the principal of the coal severance tax trust fund for 

such purpose. When the legislature validly acts to establish 

a debt under Art. VIII, 5 8, that i~debtedness becomes a 

state obligation extending over the life of the indebtedness, 

and every succeeding legislative assembly has an unavoidable 

duty to provide for it, in the manner required by the 

authorizing law. The provisions of the statutes herein 

mentioned, and of Ch. 705, Laws of Montana (1983), (H.B. 

885) , validly pledge the coal tax revenues so authorized for 

the repayment of the bonded indebtedness, and validly bind 

each succeeding legislative assembly to provide for their 

repayment. 

The legislature has provided us with a unique and 

innovative water resource development program; but there is 

nothing new or alien about funding public long-term state 

bonds through dedicated revenues. 

VI . 

Grossman further argues that sections 17-5-701 through 

17-5-719, MCA, Ch. 505, Laws of Montana (1981), (H.B. 846), 

and Ch. 705, Laws of Montana (1983), (H.B. 885) contain a 

pledge of money, an appropriation by the State and an 
extension of state credit to pay bonds in the future although 

said bonds are and will be created for a term of more than 

two years. These provisions, he contends, violate the 1972 

Mont. Const., Art. VIII, S 9: "Appropriations by the 

legislature shall not exceed anticipated revenue." 

Grossman contends that the constitutional framers 

intended to continue the specific provision of the 1889 Mont. 

Const., Art. XII, S 12, which provided in pertinent part: 

"No appropriation of public moneys shall be made for a longer 

term than two years." 

We agree with Grossman that the intention of the 

constitutional framers was that each legislative assembly 

should appropriate only for the next budget period and that 

such a.ppropriations should not exceed anticipated revenue for 

such period. The reason that the framers of the 1972 

Constitution did not include the clause "a longer term than 

two years" was because when the 1972 Constitution was first 

adopted it provided for annual instead of biennial sessions 

of the legislature. In 1974, 1972 Mont. Const., Art. V, § 6, 

was amended so that instead of a provision for meeting "at 

least once a year," the legislature is now required to meet 

"each odd-numbered year in regular session of not more than 

90 legislative days." Constitutional Initiative No. 1. 

We doubt that Grossman is serious that any legislative 

assembly could not, under the 1972 Montana Constitution, 

provide for public debt over a long term, and bind succeeding 

legislative assemblies to appropriate monies to cover that 

public debt. Such a construction would almost necessitate 

the convening of another constitutional convention to make 

specific such power. In any event, the matter was settled in 

Martin v. State Highway Commission (1939), 107 Mont. 603, 88 
P.2d 41, and what we have said earlier in this connection in 

section V of this opinion covers our answer to this 

contention. We find no merit in the constitutional attack on 

the provision for binding succeeding legislative assemblies 

to provide for the payment of the long term public debt. 

VII . 

Section 2, paragraph (2) of Ch. 705, Laws of Montana 

(1983), (H.B. 885), authorizes the creation of state debt by 

sale of coal severance tax bonds in an amount not to exceed 

$45.35 million for the development of hydroelectic power at 

three state-owned dams, Painted Rocks Dam, Broadwater Dam, 

and Cooney Dam. Under sections 85-1-501 through 85-1-5u, 

MCA, the Department of Natural Resources and Conservation 

(DNRC) and the Board of Natural R-esources and Conservation as 

governing board are mandated to make such hydroelectric 

projects, when completed, available for lease to public 

utilities and electric cooperatives or any Montana 

corporation proposing use substantial portion the 

electricity to be generated in its own operation. Section 

85-1-502, MCA. If no lease applications are received or if 

the board rejects all lease applications, the department 

itself may operate the hydroelectric generation facility. 

Grossman states that this offends 1972 Mont. Const., 

Art. V, S ll(5): 

"No appropriations shall be made for religious, 

charitable, industrial, educational, or benevolent 

purposes to any private individual, private 

association, or private corporation not under 

control of the State." 

We note that the legislature found that the 

hydroelectric developments named here would implement the 

State ' s policy of full use, conservation, and protection of 
its water resources. Section l(6) (a), Ch. 705, Laws of 

Montana (1983) , (H.B. 885) . 

The legislature also provided that the bonds may not be 

issued by the Board of Examiners until the Roard of Natural 

Resources and Conservation has determined that the projects 

are feasible, and otherwise comply with the requirements of 

law. Section 3(2), Ch. 705, Laws of Montana (1983), (H.B. 

885). 

Grossman contends that Art. V, § 11 of the 1972 

Constitution is violated by these provisions which benefit, 

he claims, the public utilities and the rural electric 

cooperatives of the State, and possibly the "ABC Aluminum 

Company" that might want to come in and use cheap power. 

The constitutional provision is not violated because the 

legislature may in making appropriations or other provisions 

in some way benefit incidentally various private individuals, 

associations or corporations not under the control of the 

state. As long as the provisions relating to the 

expenditures of the funds derived from the proceeds of the 

bonds are under the control of the state, the constitutional 

mandate is satisfied. Thus in Huber v. Groff (1976), 171 

Mont. 442, 558 P.2d 1124, in construing the Housing Act of 

1975, we found that even though the act directly benefits 

banks and other lenders who sold mortgages to the Montana 

Board of Housing, as well as builders of homes and 

individuals who received low interest mortgages as a result 

of that program, the Act was constitutional because the 

Housing Board was not a private corporation, but a public 

entity. "It received all of its powers directly from the 

legislature and its duties and responsibilities are set out 
clearly by the statute which created it." 171 Mont. at 457, 

558 P.2d at 1132. 

In State ex rel. Normile v. Cooney (1935), 100 Mont. 

391, 47 P.2d 637, this Court held that the issuance of 

revenue bonds by the State Water Conservation Board to 

finance an irrigation and flood control project did not 

violate a similar constitutional provision in the 1889 

Montana Constitution though the project would benefit the 

shareholders of a private water users association, because 

the appropriation was made to an agency of the state and 

thereby served a public use. 

In this case, the funds derived from the sale of the 

coal tax severance bonds, to the extent authorized, will be 

expended by a state agency under the control of the state for 

the construction of hydroelectric power projects. The 

appropriations therefore are made for an agency of the state, 

and not for a private person, association or corporation. 

The fact that the state may afterwards lease completed 

hydroelectric projects to a private association or 

corporation is no more offensive constitutionally than is the 

power of the state to lease its state-held lands to private 

parties. There is no merit in Grossman's contention under 

this section. 

VIII. 

Art. VIII, 1 of the 1972 Montana Constitution 

provides: "Taxes shall be levied by general laws for public 

purposes." 

Grossman avers that the legislative plan of 

appropriating $17 million from the proceeds of coal severance 

tax bonds for loans to cities, counties, and other political 

subdivisions or local governmental bodies violates Art. VIII, 
S 1. He contends that the funds used to service a debt of 

coal severance tax bonds are generated by the general taxing 

powers of the state and that the funds will not be used for 

public purposes but rather for financing special local 

purposes. 

These contentions are weightless. The question of 

whether a particular purpose for which taxes may be levied 

and collected is a public purpose is for the legislature in 

the first instance, and the courts will indulge every 

reasonable presumption of favor of the legislative decision 

in this respect. Lewis and Clark County v. Industrial 

Accident Board (1916), 52 Mont. 6, 155 P. 268. The words 

"public purposes" are synonymous with "governmental 

purposes." State ex rel. Mil-1s v. Dixon (1923), 66 Mont. 76, 

90, 213 P. 227, 231. 

The purposes for which these bonds are issued are set 

out more fully in § 6, Ch. 705, Laws of Montana (1983), (H.B. 

885). We need not repeat them here. It is enough to say 

that for the most part the loans are authorized to provide 

financial aid for city water systems, water distribution 

systems, water supply treatment facilities, sewage treatment, 

construction to provide reliable supplies of water, and plans 

to alleviate water shortages. In one case a rural water 

system is authorized where presently water must be hauled for 

both domestic and stock water purposes. In each case the 

legislature has found specificalllr the public purpose 

involved, in some instances to resolve health hazards to the 

residents being served, to prevent health problems, to 

improve the quality of ground water, to improve the water 

supply performance, and to stabilize water supplies. 
Hon. John C. Sheehy 

Justice, Supreme Court 

Room 414 Justice Building 

215 North Sanders 

Helena, Montana 59620 

CORRECTION. In preparing this opinion for publication, we noted in our verification of titles and 

citations the matters listed below. Corrections have 

been made on our copy of the opinion. 

Date: 

Re: July 10, 1984 

Grossman v. State Dept. of Natural Resources, No. 83-453, May 7, 

1984 

Page 32, line 7 --- Lumberman's Trust Co. v. Ryegate should read 

Lumbermen's Trust Co. v. Ryegate. 

Page 37, line 6 --- 238 P.2d - 316 should read 238 P. 316. 

WEST PUBLISHING COMPANY 

Box 3526 

St. Paul, MN 55165 
It is clear that the purposes of the loans for which the 

$17,044,735 is authorized affects the inhabitants of the 

particular areas as communities, and not merely as 

individuals. The use of the loan proceeds will clearly be 

for public purposes. See Stanley v. Jeffries (1929), 86 

Mont. 114, 284 P. 134; Hansen v. City of Havre (19411, 112 

kMont. 207, 114 P.2d 1053; Lumbermg'n's Trust Co. v. Ryegate 

(9th Cir. 1932), 61 F.2d 14. 

IX. 

Art. V, S 1, 1972 Montana Constitution provides: 

"The legislative power is vested in a legislature 

consisting of a senate and a house of 

representatives. The people reserve to themselves 

the powers of initiative and referendum." 

Grossman insists that section 3(2) of Ch. 705, Laws of 

Montana (1983) , (H.B. 885) delegates and grants to the Board 

of Natural Resources and Conservation the power and authority 

to determine the feasibility of the various water 

conservation projects and to make recommendations on the 

projects to the Board of Examiners. Grossman further 

contends that such delegation is unconstitutional in that it 

fails to set forth adequate standa.rds with reasonable clarity 

or to place any limits on the discretion of the Board, and as 

such violates Art. V, S 1. 

Section 3(2) is pointed toward the authorization of 

$45.35 million of coal severance tax bonds to finance 

hydroelectric power generating facilities at three state 

owned dams. The bonds however may not be issued until. a 

determination of "feasibility" is made by the Board: 

" (2) Bonds approved in this section may not be 

issued by the board of examiners until the board of 

natural resources and conservation has determined 

that a project is feasible and has otherwise 

complied with the requirements of Title 85, chapter 
1, part 5, for the development of hydropower at 

water projects under the control of the 

department. " 

It must be remembered that the legislature has also 

found in Ch. 705, Laws of Montana (1983), that the water 

development program is an integral part of the implementation 

and development of a comprehensive, multiple use water 

resources plan; and that the hydroelectic developments at the 

three dams here implement the state's policy of full use, 

conservation and protection of its water resources. All that 

the legislature has done in (5 3(2), Ch. 705, Laws of Montana 

(1983), is to add a proviso to its otherwise constitutional 

authorization for bonds to the effect that feasibility under 

Title 85, chapter 1, part 5, MCA, shall be determined by the 

Board. 

Contrary to the arguments of Grossman, there are 

standards which impose with reasonable clarity limits on the 

discretion of the Board in determining feasibility. These 

are found in sections 85-1-501 and 85-1-502, MCA. Under 

those statutes, the Department of Natural Resources and 

Conservation is required to study the "economic and 

environmental feasibility of constructing and operating" the 

hydroelectric power generating facilities on each of the 

water projects under its control and to update those studies. 

The Department is to take into account the estimated costs of 

construction, the estimated cost of maintaining, repairing 

and operating the facility, the costs of tying into existing 

power distribution channels, the ability of public utilities 

or cooperatives to lease and operate such facilities, the 

debt burden to be serviced, the revenue to be expected and 

the likelihood of a reasonable return on the investment. 
Once the Department has determined and made such studies, it 

then becomes the duty of the Board of Natural Resources and 

Conservation under section 85-1-502, MCA, to determine the 

feasibility of a project and whether the project is in the 

"best interest of the people of the state of Montana." What 

the legislature has really done in the enactment of Ch. 705, 

Laws of Montana (19831, and Title 85, chapter 1, part 5 is to 

integrate executive duties with its 1-egislative 

responsibility to make a workable whole in the development of 

small scale hydroelectric power facilities for the public 

good. 

Here the enactments of the legislature are complete and 

delegate to the Board of Natural Resources and Conservation 

and the Department of Natural Resources and Conservation 

administrative authority which is sufficiently clear, 

definite and certain to enable the agencies to know their 

respective rights and obligations. Huber v. Groff (1976), 

171 Mont. 442, 558 P.2d 1124; Montana Milk Control Board v. 

Rehberg (1962), 141 Mont. 149, 376 P.2d 508. Determinations 

of economic and environmental feasibility are far more 

appropriate in the administrative sector than in the 

legislative branch. There is nothing improper, 

constitutionally or otherwise, in the legislature making its 

authorizations contingent upon administrative decisions 

properly made in the executive side of the state government. 

n. 

We have already set out in section V. of this opinion, 

the provisions of Art. VIII, S 14 and Art. IX, § 5 of the 

1972 Montana Constitution. 

In H.B. 846, Laws of Montana (1981), the legislature 

a.uthorized issuance of not to exceed $10 million in coal 
severance tax bonds for the State's share of the construction 

costs of the Tongue River Dam rehabilitation. Grossman 

attacks the authorization for such bonds upon the ground that 

the amount of money necessary to finance the project is not a 

definite or certain amount and therefore violates Art. VIII, 

S 14, and Art. IX, 5 5. 

The legislature found that the present Tongue River Dam 

is in a dangerously unsafe condition because of an undersized 

spillway; that a washout is possible from a flood which may 

be expected every 68 years; that the dam almost failed during 

a flood in the spring of 1978; and that a dam failure would 

result in devastating property damage downstream to the 

communities of Birney and Ashland. The legislature further 

found that an enlarged Tongue River Dam that is jointly 

funded by the federal government and the state government and 

jointl-y managed by the Northern Cheyenne Tribe, the 

Department of Natural Resources and Conservation, and the 

federal government can provide a cost effective means of 

preserving existing project benefits, provide water for 

future agricultural and tribal use, preserve recreational 

values and facilititate the negotiation of a compact between 

the Tribe and the ~eserved Water Rights Compact Commission 

regarding tribal rights to water in the Tongue River. 

At the time of the passage of the authorization for the 

Tongue River Dam bonds, it was, of course, impossible for the 

legislature to know the exact cost that the State might face 

in the rehabilitation project. Therefore, it authorized an 

issuance of up to $10 million of coal severance tax bonds as 

the State's "share of the construction costs of the Tongue 

River Dam rehabilitation" as established in a joint sharing 

of project costs between the state, the federal government, 
and the Northern Cheyenne Tribe. The authorization is 

contingent upon legislative approval of a detailed project 

plan approved by the Board of Natural Resources and 

Conservation that includes a resolution of the Northern 

Cheyenne Tribe's water right conflicts in the Tongue River 

Basin, the appropriation of federal funds and a construction 

project approved by the Board of Natural Resources and 

Conservation and the legislature. 

It should be recognized, though, that there are further 

financial fences set about the appropriation. Although the 

interest rate at which the bonds will be issued cannot be 

projected, the bonds may not exceed 40 years in duration, and 

may include provisions for redemption at earlier times. 

Section 17-5-710, MCA. The Board of Examiners may not issue 

coal severance tax bonds unless the aggregate amount of bonds 

outstanding, including any approved issue and. any bonds 

authorized but not issued can be serviced with no more than 

two-thirds of the annual deposits into the coal severance 

bond fund as determined by the average of the deposits during 

the preceding three fiscal years. Section 17-5-709(2), MCA. 

This is in addition to safeguarding provisions relating to 

other sources of revenue. 

Grossman bases his contention here on Art. VIII, § 14, 

which states: "Except for interest on the public debt, no 

money shall be paid out of the treasury unless upon an 

appropriation made by law and a warrant drawn by the proper 

officer in pursuance thereof." He contends that under State 

ex rel. Dean v. Brandjord (1939), 108 Mont. 447, 92 P.2d 273, 

a similar section of the 1889 Constitution was interpreted 

and this Court held that while the precise figure might not 

be nicely ascertained, there should he a maximum amount 
contained in the authorization above which a warrant would 

not be drawn. Grossman states there is no such maximum 

contained in the acts under question. 

In passing upon a similar objection in State ex rel. 

Toomey v. State Board of Examiners (1925), 74 Mont. 1, 10, 

238 P.M. 316, this Court sa-id: 

". . . by the provisions of the Act in question, 

our legislative assembly exercised that power; the 

amount of principal is definite; and, when the 

treasury notes are sold, the rate of interest will 

be fixed within the maximum provided in the Act. 

Nothing is left then to the executive officers but 

a. mathematical calculation. The rule that 'that is 

certain which can be made certain' applies to 

appropriations. (Citing authority.)" 

In these days of fluctuating and sometimes volatile 

interest rates, no legislative assembly can be expected to 

project with any degree of confidence the interest rate which 

will meet the market for the issuance of state bonds. The 

cost of borrowed money appears to be beyond the control of 

any of us. Yet when the bonds are issued and sold, the 

interest rate to be paid by the State will become certain. 

The principal will be definite; the amounts annually 

necessary to service and repay the bond of indebtedness can 

be ascertained. with mathematical precision. The rule applied 

in Toomey above, "that is certain which can be made certain" 

applies with full force here, and renders Grossman's 

contentions respecting vagueness and indefiniteness 

pointless. 

XI. 

Grossman alleges that H.B. 846, Laws of Montana (19811, 

is not a complete appropriation and requires a further 

three-fourths vote of each house of the legislature in order 

to spend money from the constitutional trust fund as required 

by 1972 Mont. Const., Art. IX, 5 5. 
Grossman does not enlarge upon these allegations in his 

brief, nor does the State respond to the allegation. 

If, in making the allegation, Grossman is contending 

tha.t the Tongue River Dam Rehabilitation Bond Program, 

authorized by H.B. 846, Laws of Montana (1981) is a 

continuing appropriation which violates the constitution as 

discussed by u.s in section V above, we have already refuted 

that contention. Grossman may mean, however, that under H.R. 

846, the appropriation is not complete because the 

authorization for the issuance of the bonds for the Tongue 

River Dam rehabilitation requires a further a.pprova1 of the 

project by the legislature. With that possible contention, 

we do not agree. 

The requirement for a three-fourths vote of the members 

of each house of the legislature is found in 1972 Mont. 

Const., Art. IX, § 5. It is a safeguard provision for use of 

the trust principal or income from coal severance taxes. 

H.B. 846 was approved by three-fourths of each house and is a 

valid and final authorization for the issuance of the bonds. 

We see no need for any further three-fourths vote. Once the 

project is approved, the state's share established, and the 

bonds issued, the legislature has effectively provided in a 

con.stitutiona1 manner for the issuance of such b0nd.s. 

XII. 

Lastly, Grossman contends that the appropriations of the 

coal severance tax trust funds, the investment disbursements 

to be made thereund.er, the holding of the proceeds of coal 

severance tax funds by a trustee, and the use of the trust 

funds bond proceeds, violate 1972 Mont. Const., Art. VIII, S§ 

12 and 13. 
In essence, section 12 requires that the legislature 

insure strict accountability of all revenue received and 

money spent by the State. Section 13 requires the 

legislature to provide for a unified investment program for 

all public funds with rules therefor, including supervision 

of investment of such funds. 

Grossman's a-ttack with respect to strict accountability 

is apparently directed at section 17-5-711, MCA, which allows 

the Board of Examiners to appoint a trustee, which may be any 

trust company or bank having the powers of a trust company, 

by means of a trust indenture. However, the succeeding 

statute, section 17-5-712, MCA, provides that the trust 

indenture may set forth such rights and remedies of the bond 

holders as is customa.ry in trust indentures and may include 

provisions for protecting and enforcing the rights and 

remedies of the bondholders, including covenants setting 

forth the duties of the State, the Board of Examiners, and 

the departments or agencies in the state government in 

relation to the acquisition, construction, improvement, 

maintenance, operation, repair, and insurance of the projects 

involved, and for the custody, safeguarding and application 

of all money. 

In Huber, this Court approved an act which authorized 

the Montana Board of Housing to issue bonds secured by a 

trust indenture between the Board and a corporate trustee. 

We adhere to the discussion respecting the unified investment 

program in that case where we said: 

"The Constitution's provision for the unified 

investment fund does not require that all agencies 

participate regardless of the nature of the agency. 

Where, as here, the agency is not using state funds 

and is setting up what amounts to its own 

specialized investment fund with a particular 

purpose, it is reasonable to allow, as the 
legislature did, the agency to take care of its own 

funds in a manner appropriate to its function." 

171 Mont. at 460, 558 P.2d at 1133. 

We hold that the provisions made for the issuance for coal 

tax severance bonds for water resource development do not 

violate the "strict accountability" provision nor the unified 

investment provision of our Constitution. 

XIII. 

Section 85-1-623, MCA, enacted as section 1, chapter 

507, Laws of Montana (1981), authorizes the issuance of not 

more than $5 million of water development bonds. These bonds 

are to be distinguished from the coal severance tax bonds 

which are authorized in Ch. 705, Laws of Montana (1983) , and 

H.B. 846, Laws of Montana (1981). Although the wa-ter 

development bonds are secured by a portion of the coal 

severance tax monies, section 85-1-603 (2) , MCA, the sources 

are separate from the trust monies from coal severance taxes 

that are covered by 1972 Mont. Const., Art. IX, § 5. 

Grossman does not directly attack the validity of the 

water development bonds, though reference to the $5 million 

authorization contained in H.B. 846 has been made in briefs 

and in oral argument. Grossman's legal attack in his 

pleadings and his brief has been focused totally on the coal 

severance tax bonds, authorized under Ch. 705, Laws of 

Montana (1981); and H.B. 846, Laws of Montana (1981) relating 

to bonds for the Tongue River Dam. We have therefore 

confined our discussion in this opinion to the attacks made 

by Grossman on the coal severance tax trust fund bonds. 

XIV. 

b26 It is, therefore, our conclusion and holding that the 

bonds proposed to be issued and sold by the State under the 

provisions of Ch. 705, Laws of Montana (1983), H.B. 885, Laws 
of Montana (1981) and under H.B. 846, Laws of Montana (1981), 

relating to the Tongue River Dam, are valid enactments by the 

legislature, constitutionally provided for and safeguarded. 

We hold in favor of the defendants and against the plaintiff 

Ray Grossman on each and all particulars of the plaintiff's 

complaint and enter declaratory judgment in favor of the 

defendants. This opinion, without the filing of further 

instrument or order sha.11 be and constitute a declaratory 

judgment to that effect. 

We Concur: 

Chief Justice